Brembo Keeps Expanding Output in Mexico, U.S. As It Awaits Trump Effect on NAFTA

Brembo SpA continues to expand U.S. production even as the Italy-based maker of brake components braces to find out what the impact of President-elect Trump's trade policies will be on Brembo's also-expanding presence in Mexico.

The company known for its red stylized "b" logo on its brakes on upscale sporty vehicles makes brake discs, calipers and corner modules at a complex in Homer, Michigan, where employment now is pushing 500 people compared with only about 100 workers a decade ago.

But Brembo also produces car brake discs at one plant in Mexico and plans to open two new foundries in Escobedo, Mexico, next year to pour aluminum calipers and cast-iron brake rotors after a $131-million investment there.

Will Trump's persistent promises to rip up the North American Free Trade Agreement significantly complicate the continental production footprint that Brembo -- like many major auto suppliers -- has so carefully laid over the last couple of decades? It's a complex system that involves continuous shipping of components and sub-assemblies back and forth across the Texas-Mexico border without financial penalty, just as NAFTA was envisioned.

"We don't know," Dan Sandberg, president and chief executive officer of Brembo North America, told me. "It's hard to tell what the new administration would have in mind when they talk about changing NAFTA. Would it be just components [that might have tariffs slapped on them] or would it be the finished product only?"

The question has been thrown into even higher relief just today after the decision by Carrier, a unit of United Technologies, to keep at its Indianapolis operations about half of 2,100 jobs that were supposed to move with air-conditioner production to Mexico. Trump made the company a significant whipping boy in his campaign stops in the industrial Midwest, then after the election reportedly offered some unspecified government financial incentives that persuaded UT CEO Gregory Hayes to make a deal with the ultimate dealmaker.

But Sandberg believes that Trump and his charges may need to be educable on how trade works and, specifically, on how automakers and suppliers compete in an industry that may be the most global of any.

"It's not as simple as just saying you've got to bring all the components here to the U.S. and have them built into a car," he noted. "The reason we've expanded as we have is that we're going to where our [OEM] customers are located, and that's whether it's North America in Mexico or the United States, putting plants near our customers.